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'RBI may delay policy rate hike a few weeks'
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SME Times News Bureau | 29 Jun, 2010
Amid debate on how soon the Reserve Bank of India will raise key policy rates to tame inflation, a report has viewed that the central bank may wait for a few weeks before raising policy rates.
The Citigroup report maintained, however, that RBI's lending (repo) and borrowing (reverse repo) rates to banks will rise by 75 basis points (0.75 per cent) in 2010, in view of rising prices coupled with the surge in industrial production.
The RBI is slated to come out with its quarterly monetary review on July 27, 2010. It has already raised key rates twice this year to curb money supply, as part of efforts to tame food inflation from spreading to manufactured goods.
Recently, RBI Deputy Governor K C Chakrabarty, reacting to the inflation figures, had hinted that the central bank would further tighten money supply to control inflation. "Inflation will definitely come down...if it does not come down, definitely Reserve Bank will act", he had said.
While food inflation, which has been above 16 per cent for nine straight weeks, reached 16.90 per cent for the week ended June 12, the general inflation reached double digits at 10.16 per cent in May.
Some experts have said that RBI could tighten policy rates soon to check the price rise.
However, some industry chamber feel that further tightening of money supply by the Reserve Bank of India (RBI) as a measure to control inflation would weaken the economy further.
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